Costs Come Tumbling Down

The health care industry has been slow to comply with new federal requirements for the electronic exchange of medical data. So how did one cooperative find a way to complyfour years ago?

Costs Come Tumbling Down

Besides acting as a post office, the NEHEN middleware also took on some processing abilities as the needs of certain members became clearer. "Some early processing is done right within the gateway," says DeBor.

Requests for information are not sent to all members of the network. Instead, the middleware first inspects the request tags and determines what peer device is most likely to have the information. It then sends on the query to only those devices. As each device provides its information, the middleware aggregates it and, when complete, sends it back to the requester.

Most important, the middleware sent back results. When the network went live 60 days following the Bourbon Street meeting, it began producing tangible savings immediately, reducing the cost of each exchange of data.

Halamka says that at CareGroup the cost of each eligibility check was trimmed from $4.74 per inquiry to just 15 cents. And at Partners, Glaser says costs went from $2.64 to 10 cents per eligibility check.

DeBor credits the successhuman and technologicalwith the fact that the Bourbon Street Coalition set down clear markers and stuck to its founding principles. "Keep it simple," DeBor says. "That was the prime directive from the start. Keep the cost of entry low. And be minimally intrusive to the member's established operations."

The success experienced by the first five NEHEN members was rapid and convincing. By October 1998, six months after the New Orleans meeting, the system was already handling 50,000 eligibility transactions a day, notes Halamka.

Before NEHEN, the call centers of health care payers took an average of 15 minutes per request, as they checked their own records to verify that a patient was indeed insured by them. Health care providers often skipped the verification process and instead just sent the bill to the patient's insurance company. This resulted in a high volume of denied and contested claims, increasing administrative costs for both providers and payers.

All of that changed when the NEHEN network went live. Suddenly, verifying the treatment eligibility of a patient was reduced to keying identification information into the NEHEN network and pressing Enter. Approval or denial came within as little as two seconds.

In October 1998, monthly transaction volume for eligibility checks across the NEHEN network was just under 12,000. A year later, it was more than 71,000. And, by the end of 2000, it had jumped to more than 12,000 a day.

The rollout was not without its problems. But they were less technical than organizational, DeBor contends.

The companies involved were used to functioning unilaterally and did not take easily to suddenly having to worry about their NEHEN partners' operations as well as their own. "We would have situations such as an emergency room trying to verify a patient at 2 a.m., only to discover that the insurer's system would not respond because that was when they had always scheduled their backups," DeBor says.

Another problem surfaced when some companies decided to send requests in batches rather than one by one. "The system worked fine for individual files, but some users preferred to send their requests in batches," DeBor says. "Some of the recipients' systems were not ready for that. So the requesters would be standing around waiting for the response, assuming it would come quickly, only to find out that the sender's system was not set up to process batch requests." An update to the middleware, coming soon, will provide for batch processing.

Keeping the providers and payers on the same deployment timeline also proved problematic. "Payers wanted to deploy different features on their own timeline," says DeBor. "But, of course, the providers wanted the payers all up and running at the same time so they had continuity across all payer systems."

Insurers also saw savings, thanks largely to fewer denials of services already rendered. Before joining NEHEN, Harvard Pilgrim reported more than $1 million a year in losses due to the intake, treatment or contested claims of nonqualifying members. One year after implementing NEHEN's online verification system, the same line in the company balance sheet showed a $1 million savings in verification-related expenses, according to Halamka.

The benefits that accrued to the founding partners were so profound that NEHEN's ranks began to swell, as payers and providers lined up for membership. By the beginning of 2001, insurer members of NEHEN covered more than 60% of the insured in Massachusetts and provider members controlled more than 80% of the hospital beds in the state.

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